Big Data Medicine

MondayJust back from an exhausting speaking tour. Just harrowingly tiring. But I did have an experience that I thought was so interesting in the world of economics that I want to share it with you.

On Thursday, in Philadelphia, I spoke to a company group organized by an entity called Global Healthcare Exchange. It was part of my work, but in prepping for it, I delved back into the land of Supply and Demand curves and how they are affected by the staggering power of the Internet and what we like to call Big Data — in this case, massive stockpiles of information about drugs, medical supplies, the costs of these things, the records of various suppliers, the records of providers and of patients.

What I learned might be called a subhead of Lord Kelvin’s aphorism that “There is no science without measurement.” In this case, we might say that “There is no chance for healthcare we can afford except measurement.”

We all know that the demand for medical services is immense and growing. It is the largest single part of the national economy aside from transfers. It is exploding as the population ages. This is what we would call a demand curve with a vengeance. It slopes down but never quite hits zero because there are so many subsidies and mandates from government done in the excellent name of humanitarianism. We do not want to tell people that because they are not rich, they cannot get healthcare. So poor people and many lower middle class people seem to get it for free. Hence a demand curve like a piranha.

But of course, it’s not free. When you, an upper- middle-class person, goes into the hospital and have to pay twenty-five dollars for a band-aid and a thousand dollars for a blood draw, you are paying for those people who seem to be getting healthcare “for free.”

And when your taxes go to Medicaid or Medicare, you are paying for that “free” healthcare. And when your health insurance bills sky rocket, you are paying for OPH — Other People’s Healthcare.

Nothing is free, and the “free” ride that tens of millions — maybe over a hundred million, maybe over two hundred million soon — will be getting as Obamacare mushrooms towards full-scale single-payer socialized medicine will be a ride into national bankruptcy unless Something Is Done.

Again, as humanitarians, we cannot simply order an end to demand for healthcare, which is often the provision of life itself.

But GHX is about using the Super Powers of the computer and the Internet to do something about supply.

At this chaotic point in the national life, healthcare costs are all over the place. They are not standardized in amount. The goods are not standardized in quality. And the doctor or hospital chain has no certainty that they are paying the lowest possible cost for those syringes and bedpans and antibiotics. Healthcare is a multi-trillion-dollar business. Where do you even start with such a vast forest of goods and services?

Well, where did Walmart start? Where did Fed Ex start? Where does anyone attempting to create a neat, efficient, orderly logistical chain start? Where does Boeing start when it’s building an immense new jet?

By using the tools of Big Data to find the most effective, efficient suppliers. By grasping the mountains of data that exist about price, quality, and reliability to offer doctors and hospitals a service as reliable as Fed Ex or UPS or Boeing only about healthcare.

It could not be done without computers and the Internet and it can be with Big Data. The Supply Curve can be pushed flatter and farther to the right side of the graph as costs are held down. There need be no diminution in patient care quality. Overcharging suppliers will have to reduce their prices but that’s the free market. There is no reason to stop there. The computer and the Internet can be used to find the most successful hospitals in terms of outcomes and costs. It can be used to find health insurance cheats. It can be used to sleuth out physicians who bilk the system by comparing their revenues with others in their fields and their litigation experience.

Medicine probably never can be fully automated as a business. The one-on-one doctor-patient relationship cannot be mass produced. But the goods can be mass produced and procedures can be standardized in form and cost.

This could very conceivably be the most powerful use of the computer ever, and an unmixed healthy fruit of Big Data.

I learn a surprising amount when I pay attention to the groups I get to hang around with. There is hope on the healthcare horizon and it’s rushing towards us as reality.

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